Carbon farming: A crucial stage of net zero evolution

The Carbon Market Institute (CMI) has launched its inaugural Carbon Farming Scorecard report, which was developed with the assistance of KPMG Australia. The report presents a comprehensive analysis of how Australia’s federal, state and territory governments are supporting carbon farming in Australia and incorporating land-based solutions into their climate change policies.

Carbon farming refers to practices that increase carbon storage in the landscape or avoid the release of greenhouse gases such as methane and nitrous oxide through active management of vegetation, fire, soil or livestock. In Australia, carbon farming is an established and growing industry with the promise of reducing greenhouse gas emissions while delivering environmental, economic, social and cultural “co-benefits”, including new economic opportunities in rural areas and for Indigenous communities.

The Carbon Farming Scorecard evaluates the progress of Australia’s states, territories and the federal government in supporting this evolving carbon farming industry. Overall, Queensland (with a score of 80 out of a maximum of 100) was the standout jurisdiction in acknowledging the significant role carbon farming can play in achieving state emissions reduction commitments, the resources required to implement strong policy, and the importance of integrating environmental, agricultural productivity, and social co-benefits.

New South Wales (with a score of 64) also scored relatively strongly following its recent $125m commitment to its Primary Industries Productivity and Abatement Program, which will see carbon farming play an important role in the state’s ambitious emissions reduction targets of 50% by 2030. Both South Australia and Western Australia have also developed carbon farming policies and assessed opportunities in their state, with the remaining states and territories acknowledging the role of carbon farming but with comparatively under-developed policy frameworks in place.

The report acknowledges that the states and territories are leveraging the decade-old federal framework for verifying and crediting carbon farming and other emission reduction and removal activities, under the Emission Reduction Fund (ERF). First initiated in 2011, this regulatory and legislative framework is widely hailed as world leading. This is reflected in the federal government’s comparatively high score (70 out of 100). However, recent market interventions, such the power to veto carbon farming projects from March 2022, impacted this score considering their potential effect on supplier and investor confidence.

The report also notes that greater federal ambition, driven by stronger corporate compliance to minimise emissions, would drive greater demand for carbon offset credits generated by the carbon farming industry.

Despite recent challenges to the integrity of carbon offsetting within Australia, the analysis emphasises that, although there are areas for improvement, the necessary foundational architecture is in place for Australia’s carbon farming industry to grow with integrity and transparency.

Compared to many countries, Australia has a natural and technical advantage in carbon removal, due to its significant land and coastal resources, mature and modern agricultural sector and an already skilled and knowledgeable carbon sector. Overall, the scorecard highlights the key role Australia’s governments anticipate the carbon farming sector to playing in driving down emissions, supporting climate repair and resilience, and generating jobs, revenues and other co-benefits for communities across the country.

Scorecard Highlights:

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